Santos submits CSG plan amid sale speculation

Santos submits Narrabri CSG plan amid sale speculation

Bibblewindi water storage ponds in the Pilliga forest, part of the infrastructure for Santos' Narrabri coal seam gas project. Photo by Dean Sewell.

Bibblewindi water storage ponds in the Pilliga forest, part of the infrastructure for Santos' Narrabri coal seam gas project. Photo by Dean Sewell.


UPDATED: Is Narrabri gas project a supply saviour, or sale target?


AFTER years of delays, gas developer Santos has finally submitted development plans for its Narrabri project in and around the Pilliga forest to NSW government.

The company says the project will deliver supply security and construction jobs to the State. But opponents claim the company is seeking approval to boost the prospects of the project, given Santos has written down the value of the project by $1 billion.

Santos’ major planning assessment document for the project, the Environmental Impact Statement (EIS), was lodged with NSW Planning on Wednesday morning. The Department typically reviews EIS documents for several weeks before they are made public and submissions are opened.

Santos chief executive Kevin Gallagher was quoted in a statement on the Australian Securities Exchange which said had “spent time producing a comprehensive EIS so the local Narrabri community and stakeholders can be confident the environment and water will be protected as the project is developed”.

The statement said CSG be located on about 1000 hectares in and around the Pilliga forest near Narrabri. About 60 per cent of the project area covers land set aside by State government for forestry, the rest on privately held farmland. Santos signed a statement to government and farm groups which committed not force entry on any privately-held land.

“The EIS has concluded the Project can proceed safely with minimal and manageable risk to the environment,” Mr Gallagher said.

“(D)evelopment of new natural gas resources is crucial in assisting Australia’s move towards a clean energy future. In NSW alone, more than one million homes and 33,000 businesses rely on natural gas as a source of energy.” 

The project was create 1300 jobs during construction, with around 200 ongoing jobs, and deliver up to $1.2 billion in state royalties over its lifetime, Santos said.

In December 2016 Santos announced it would package its second-tier assets into a separate division, including the Narrabri project, sparking speculation the projects could be sold.

The Australian Financial Review reported at the time the "sweat or exit" strategy for assets in the non-core business, may be sold. But the company denied there were plans to sell the Narrabri project.

Australian Petroleum Producers and Exploration Association chief executive Dr Malcolm Roberts said it “is important some fundamental facts are not lost in the post-truth, social media frenzy from activists” – namely the claimed benefits of the project and the rigour of its scientific assessment.

Sale speculation

Gas consultant for pro renewable energy Institute for Energy Economics and Financial Analysis Bruce Robertson said the Narrabri project “is clearly for sale”.

Mr Robertson referred to Santos’ mid-year statement to the market last year, where Santos cited a net impairment loss of $4 million relating to Gunnedah exploration and evaluation assets.

“The impairment charges have arisen primarily as a consequence of the reduction or delay in future capital expenditure that diminishes or removes the path to commercialisation,” Santos reported.

According to Mr Robertson, Santos are “trying to pretty it (the Narrabri project) up for sale” with an EIS approval.

“But I doubt anyone will but it. It will be high cost production at a time when people don’t want it. There is a global LNG glut at the moment,” Mr Robertson.

Local reactions

Local opinion is divided by the Narrabri project. Local lobby group Yes2Gas began two years ago to support Santos. 

Spokesperson Louise Tout said professional fly-in-fly-out protesters “have upset the local residents and have galvanised support for the project”, as residents looked forward to the developments’ economic benefits.

Lock the Gate NSW coordinator Georgina Woods said the project “makes no sense economically, socially, politically or environmentally and it is our hope that it soon falls over under the weight of public opposition and economic absurdity.”

Local Lock the Gate spokeswoman Megan Kuhn, Bundella, said “For years the communities of the North West NSW region have shown we are staunchly opposed to CSG development and the risks it brings to our farms, our livelihoods, and our families’ health. The Government needs to listen to the community and reject this project.”

Political fallout

“This is a huge test for Premier Berejiklian who should clarify whether she will support the development,” said Greens mining spokesman Jeremy Buckingham.

“The NSW Government were punished for supporting this industry at the last state election and can expect similar electoral pain if they do not change course.”

NSW Labor resources spokesman Adam Searle said “Labor’s position on CSG is clear”. The party has a Bill before parliament to ban onshore gas in sensitive areas, include recharge areas of the Artesian Basin.

“We want an immediate statewide moratorium that is not lifted unless the industry is proven to be safe… Labor in government would never grant a production licence for its Narrabri project."

 Santos sinking a water monitoring bore in the Pilliga.

Santos sinking a water monitoring bore in the Pilliga.

Pipeline plans

Pipeline operator APA Group has announced a $500 million deal for a pipeline to connect the Narrabri project to NSW main gas artery, which runs from Moomba in South Australia to Sydney. The deal is contingent on the Narrabri project’s development.

The 450 kilometre pipeline would run south from Narrabri past Nyngan to connect with the Moomba pipeline South West of Condobolin. A fact sheet on the pipeline project said while a proposed route had been identified, the final plan was yet to be finalised.

But APA said it is in the process of identifying all landholders and leaseholders in the vicinity of the proposed route. 

“If you are in this category we will be making contact with you in the near future to arrange a detailed briefing,” APA’s factsheet said.


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